A gift card is a restricted monetary equivalent that is issued by merchants or banks to be used as an alternative to a non-monetary gift. A gift card may resemble a credit card in size and is typically identified by a specific number or code (i.e., gift card ID) without an individual's name, thus could be used by anybody in possession of the gift card.
Typically, the gift cards are backed by an on-line electronic system for authorization. In such case, the balance of a gift card is not stored on the gift card itself, but is instead recorded in the issuer's database and cross referenced to the gift card ID (e.g., a number listed on the gift card). In other cases, some gift cards may be a stored value card with the balance stored on the gift card itself. Some gift cards can be reloaded and used for multiple times. In most cases, the gift cards may have a barcode or magnetic strip, which is read by an electronic reader. Many gift cards have no value until they are sold, at which time the cashier enters the amount (i.e., the initial balance) which the customer wishes to put on the gift card. Other gift cards may have a set value and need to be activated by calling a specific phone number.
Some gift cards are issued by a merchant and are only redeemable at the stores (or vendor stores) operated by the issuer. Other gift cards are issued by a third party issuer (e.g., banks, credit card companies, or other entities such as a retail mall) and can be redeemed at a larger number of locations, such as certain business types, certain localities, or participating retailers (or vendors). Bank-issued gift cards may also be used as a rebate card in lieu of checks as a way to disburse rebate funds from a merchant. Some rebate cards can be used anywhere major credit cards are accepted. In this document, the terms “merchant”, “store”, “retail store”, “retailer”, and “vendor” may be used interchangeably depending on the context and refer to a physical business entity, information related to the physical entity, or other forms of infrastructures associated with the business entity.
Gift cards are extremely popular, yet consumers often fail to manage what gift cards they have, what amounts are left on the gift cards, where the cards can be used, and when the gift cards will expire. In addition, consumers often receive gift cards to stores they don't frequent and therefore end up never using the gift cards.